Oct 2018 Economic Update

The U.S. economy added 134,000 jobs in September, but wages grew at a lower pace over the past rolling 12 months. Wages were also up only 1.0% compared with a year earlier. Eighteen states so far in 2018 have raised their minimum wage… which helped consumer earnings this year. The net result of the ‘Obama+Trump’ presidential eras (2008 until now) is that wage growth has been up, but consumer savings has fallen to an 25-year low. Today it is at 2.4% (Source: US Commerce Dept.). In January of 1993, that figure was 10.6 percent.
Currently, the unemployment rate is about 3.7 %, the lowest since 2000. Since the Great Recession, (ended late 2009 with unemployment at 11%), the economy has added jobs consistently over much of that time period (monthly basis). Arguably, this is the longest streak on record.

For years, employers have increasingly said they can’t find skilled workers for highly technical, scientific and other careers requiring extensive education and training (e.g. CPAs), which has changed only slightly over the past 6 years. Therefore, the consensus is that much of these numbers, mentioned above, are unskilled workers that may only be earning enough to survive, and with no ability to save money. It is estimated that over 12 percent of the average consumer’s paycheck is used on discretionary spending (non-essentials), and that figure is growing consistently. Generally speaking, folks have the same false sense of security and wealth as they have always had before huge market crashes.

I project GDP to rise by only 1.5 percent in 2019 compared to 3.3 percent for 2018. I feel any increase in disposable income though, will be partially offset by the continuance of rising home and food prices. Because of the ongoing turmoil or war in or around oil producing nations, I project oil prices to continue doing what they have done over the past year (increase), translating to higher gasoline prices for you and me.

For the final quarter of 2018, the Federal Reserve may continue raising rates, perhaps 1 more time this year, which of course will trigger a boost in overall inflation. American investors certainly see more rate increases on the horizon, as they have tightened their wallets and are investing and saving less. Call (208) 407-0185 to avoid getting caught in this trap.

Some economists feel that economic growth is expected to stagnate and maybe decline by the second half of 2019, and a moderate to strong recession will begin. This is the result of many factors, but a few relate to rising interest rates, slowing construction activity, and declines in corporate earnings, and slowly rising oil prices.
My fears continue regarding almost 9 and a half straight years of stock market growth. I must say we are well overdue for a stock market crash to the tune of over 45%… probably by Mid-2019

As of this writing: “Light” Crude Oil has increased in prices (US) per barrel to $70.20, up strongly from $50.70 a year ago. During the same time period, Gold bullion has slightly increased in per ounce prices to $1,270 ($1,167 a year ago). Silver bullion has also increased slightly to $14.68 per ounce ($13.97 a year ago).

Lastly, the most popular Crypto-currency ‘Bitcoin’ is now being priced at under $6,525 per coin, still signaling a strong crash, slightly more than 58% down since its highest point of over $19,000 in December of 2017. Many confused and frustrated small investors have since left the market. Most experts however project a return to over $19K per coin by the end of 2019.